JUNO Summer 2020

When Covid-19 dragged New Zealand to a halt, we worried about our jobs and our economy. We were told to save, so we saved.

Then when shops opened again, the Reserve Bank urged Kiwis to spend, to keep the money going around. So, we spent.

We saved, then we spent. But the world doesn’t feel much safer yet. Now what do we do?

Money Mentalist Lynda Moore says Kiwis are confused.

“We’re asking, what’s going on?” she says. And she’s seeing more and more people who are anxious, uncertain, and seeking advice about their finances and their businesses.

“They’re asking, do we carry on spending? Should we be saving? This is where this whole concept of financial anxiety and ‘fight, flight and freeze’ sets in.

“Unless you’re very clear about your own financial position, what it is, and where you’re going, it is very confusing.”

Your money personality

One outcome of times of uncertainty and worry is that our ‘money personalities’ become extreme in times of stress, says Moore.

Each of us has a different attitude to money, she says, formed by our genes, our parents, and our life experiences. And each of us will react differently in times of crisis.

“When we get stressed, those behaviours can be exaggerated.”

There are five broad personality types, developed by Olivia Mellan, a clinical psychologist who specialises in relationship and money issues.

“We don’t fit straight into a box and generally we will be a combination of two types,” says Moore.

The Spender

The Spender is fairly self-explanatory. They don’t ‘do’ budgets, says Moore. “It’s all about having fun, enjoying life, spending, and worrying about it later.”

At times of crisis, Spenders believe in worrying about the future later, says Moore: “They might think, ‘I’m feeling bad, I’m just going to go out and buy this, because I need it right now’.”

That need for instant gratification is kicking in for some Spenders. If they don’t have someone around them who is supporting them or has another money personality, they can completely let loose.

“I’ve got a client who’s doing that at the moment and I’m just very gently trying to rein it back. It’s just all caused by anxiety and uncertainty.”

If you deprive yourself, you’ll find yourself spending more, so instead just put some boundaries around your behaviour, says Moore.

“Maybe it’s habits like just drawing out a limited amount of cash, so when you get your urge to splurge, you can spend that money – but once it’s gone, it’s gone.”

The Hoarder

The Hoarder is the polar opposite of the Spender. The Hoarder is usually a good money manager. They’ll have budgets, they’ll know what’s going on with their money, and they tend to be more cautious.

But when they’re stressed, that behaviour can become extreme and even destructive.

“I was talking to somebody recently who was an Amasser/Hoarder,” says Moore.

“She’s intensely in that hoarding space. She’s almost locked down her finances completely, because she’s so worried about the future.”

Hoarders should ask themselves, ‘Is this good for my mental wellbeing?”

If you’re hoarding to the extent where you’re not looking after yourself and turning off the heat pump because you’re worried about the power bill, you need to ask whether you’re pulling back so much you’re putting your mental or physical health at risk.

Plus, if you’re a business owner and you’re in that mode and start shutting down, it’s really hard to grow and recover, she says.

“In a business sense, you need to look at how you’re going to invest and change. You might need to bring people in to move the business forward.”

The Amasser

The Amasser wants to create wealth, so they tend to be forward-thinking, and they can be risk-takers, depending on which traits they’re paired with, says Moore.

Amassers will be looking one to two years further out.

At a time of financial disruption, Amassers are out looking for opportunities, says Moore. They’re saying: “There are a lot of really good opportunities out there, let’s look for opportunities.”

An Amasser/Hoarder right now is probably a really good space, because they’ll be looking at what’s going on ahead, they’ll be planning, but they’ve got that Hoarder trait to keep them in check.

That will make sure that they’re not just out there, bargain-hunting and grabbing.

However, an Amasser/Spender has to be a bit more cautious and rein themselves in, she says.

At a time of crisis, an Amasser should be looking very closely at the opportunities and not just saying, ‘Wow, it’s really good interest rates now – I’ll go and buy five houses,” says Moore.

“You need to be monitoring and examining your choices and making sure you’re looking at the pros and cons.”

The Avoider

he Avoider just doesn’t want to know; it’s just all too hard.

They just want to bury their heads in the sand and hope thing are just going to come right.

Some Avoiders have got someone else looking after their money, so they don’t have to worry about it, says Moore.

At a time of crisis, Avoiders are just burying their heads further into the sand. They’re saying, “I just can’t look at my financial situation; I don’t want to know.”

Avoiders really need to get some help and get some advice at a time of crisis, says Moore. This could be from a partner, a concerned friend, or a financial advice professional.

“They really do need to pop their heads up and look at what’s going on around them.

“If they feel uncomfortable or they’re not sure what to do, they need to find someone to talk to and get some advice.

“Find an accountant, or a financial adviser, and pull your head out of the sand if you’re in that total avoidance mode.”

The Money Monk

Traditionally, Money Monks generally don’t like money, says Moore. “They don’t really like having a lot of money, so they will happily give money away.

“In this environment, a Money Monk will be happily giving money away and helping everybody else, sometimes to the detriment of their own financial wellbeing.”

Many Money Monks have a strong social conscience, so they’ll be supporting local producers but potentially paying more for those purchases.

“For example, if they’re looking for a face mask, they’ll be wanting to buy locally made reusable masks, rather than disposable Chinese masks.”

They might have a pile of requests from charities sitting on their desk, says Moore, and that’s okay.

“Continue to support charities, but maybe adjust the amount that you give to each.

“You can say: ‘I want to do it, because it’s a good thing to do, but in uncertain times, I’m just going to rein it back a bit’.”

Find that hard? If you have a strong urge to help and you really want to support a cause or a family member, then look at maybe using time instead of money, she says.

It’s a choice

So, how can you take hold of your personality type and channel it for good?

“Understand that this is your natural personality and be aware when you’re getting into that mode and that you might be getting a little bit out of control,” says Moore.

“It’s actually a choice. You can choose to continue with that behaviour, or you can recognise it and say, well, I need to pull back.

“The way you do that is to look at your numbers and start to be aware.

“You’ve got to know what’s coming in and what’s going out. You’ve got to know those core numbers and then you can make decisions around those.”

Take care with pay-outs

What happens if you’ve got a redundancy pay-out? Moore says you need to be careful of your behaviour around unexpected windfalls.

“In our minds, we put money in ‘buckets’, and we view something like redundancy or a tax refund as a gift: ‘Woohoo, we’ve never had it before, let’s go and spend it!’

“You need to get the money out of that bucket. Say to yourself, this money has to last me a set amount of time, so I have to be careful with it.”

She suggests treating it as a salary and dividing it into a number of weeks’ spending.

“If you’ve got money for eight weeks, divide the total by eight and put seven weeks away in a savings account.

“Transfer one week at a time into your main account, so you start to treat it as your salary, and live on that amount.”

Five easy steps you can take right now

Find out what your financial position is right now. Don’t guess, write it down. What do I own? What do I owe? How much do I have coming in? And have much do I have going out?

Next, if you’ve experienced change, perhaps a job loss or a business going under, then ask yourself these questions to get yourself going forward:

What’s happened? This isn’t the emotional story around it. This is: ‘I’ve been made redundant and I don’t have an emergency fund.’

What am I doing about this right now? People do go into a process of fight, flight, or freeze, so ask yourself where are you right now? You might be sitting on the couch getting really angry at the world, or you might be sitting there going, ‘What am I going to do? I don’t know how to get out of this.’ Recognise where you are right now and then as quickly as possible get into the third phase.

What am I going to do? This is where you face the fact, ‘I don’t have a job right now, I don’t have an emergency fund’, and start to take some action. Start writing down all the possibilities – everything you can think of to start moving yourself forward.

They’re not easy steps, says Moore, but they are necessary.

“There are no easy steps, other than perhaps cutting down on spending.”

Put you and your family first

But taking a step back can help, she says. “Stop looking at everybody else and what they are doing, and start focusing on you.

“I think that we all have a habit of looking around to see what everybody else is doing before making decisions for ourselves.

“Right now, you need to put you and your family at the top of that tree and make sure that you as a family unit are okay.

“What do we need to do to remain happy and healthy and financially independent?”

For some, that may mean selling something, or making changes to their lifestyle.

“Then, don’t worry about what anybody else might think about that decision, because you’ve made that decision for you and your family unit.”

To work out which money personality you are, try the quiz at www.moneymentalist.com

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